COMMERCIAL
BANKSHARES, INC.
1550
S.W.
57th Avenue
Miami,
Florida 33144
Notice
of Annual Meeting of Shareholders
to
Be Held on April 20, 2006
Dear
Shareholders:
The
Annual Meeting of Shareholders of
Commercial Bankshares, Inc. (the "Company") will be held in Miami, Florida,
at
the executive offices of the Company located at 1550 S.W. 57th Avenue, at 10:00
a.m., local time, on Thursday, April 20, 2006, for the following
purposes:
| 1. | To elect seven directors to the Company's Board of Directors; |
|
|
|
| 2. | To transact such other business as may properly come before the Annual Meeting. |
Only
shareholders of record at the close of business on March 6, 2006 are entitled
to
notice of and to vote at the Annual
Meeting and all adjournments thereof.
All
shareholders are cordially invited
to attend the meeting in person. Those shareholders who plan to attend are
requested to so indicate by marking the appropriate space on the enclosed proxy
card. Any shareholder attending the Annual Meeting may vote in person even
though he or she has previously returned a proxy.
A
form of proxy card and the
Proxy Statement of the Company relating to the Annual Meeting of Shareholders
are enclosed. Please complete, date, sign and return the enclosed proxy card
promptly so that your shares can be voted, regardless of whether you expect
to
attend the meeting.
A
copy of the Company's 2005 Annual
Report to shareholders is also enclosed.
By
order
of the Board of Directors,
JACK
J.
PARTAGAS
President
and Chief Operating Officer
March
15,
2006
Miami,
Florida
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| APPENDIX |
i
|
Annual
Meeting of Shareholders
to
be held on April 20, 2006
PROXY STATEMENT
The
Board of Directors of Commercial
Bankshares, Inc. (the "Company") is soliciting proxies to be used at the Annual
Meeting of Shareholders to be held on Thursday, April 20, 2006, and all
adjournments thereof. This Proxy Statement and the accompanying proxy card
are
first being sent to shareholders on or about March 15, 2006.
The
shares represented by all properly
executed proxies received by the Company will be voted as specified by the
shareholders. If no specifications are given (including broker non-votes),
the
shares represented by the proxy will be voted for the election of the listed
nominees as directors. A shareholder who has given a proxy may revoke it at
any
time before it is voted at the meeting by filing with the Secretary of the
Company a written notice of revocation, by submitting a proxy bearing a later
date or by attending the meeting and voting in person.
On
March 6, 2006, there were 6,041,968
shares of the Company's Common Stock, par value $.08 per share, outstanding.
Each share of Common Stock of record on the books of the Company at the close
of
business on March 6, 2006 entitles its owner to one vote, either in person
or by
proxy, upon each matter to come before the meeting.
A
majority of the shares entitled to
vote, represented in person or by proxy, shall constitute a quorum. Votes cast
in person or by proxy will be tabulated by the inspectors of election, appointed
by the Board of Directors. The current Florida Business Corporation Act (the
"Act") provides that directors are elected by a plurality of the votes cast
if a
quorum is present at the meeting, and all other matters are approved if the
votes cast in favor of the action exceed the votes cast against the action
(unless the matter is one for which the Act or the Articles of Incorporation
require a greater vote).
A
proxy submitted by a shareholder may
indicate that all or a portion of the shares represented by such proxy are
not
being voted by such shareholder with respect to a particular matter ("non-voted
shares"). This could occur, for example, when a broker is not permitted to
vote
shares held in "street name" on certain matters in the absence of instructions
from the beneficial owner of the shares. Non-voted shares with respect to a
particular matter will be counted for purposes of determining the presence
of a
quorum but will not be counted as shares present and entitled to vote on such
matter for purposes of voting, and therefore, will have no effect on matters
brought to a vote at the Annual Meeting. Shares voting to abstain as to a
particular matter and directions to "withhold authority" to vote for directors,
will be counted for purposes of determining the presence of a quorum and will
be
counted as present and entitled to vote with respect to such matter for purposes
of voting, and therefore, will have the effect of votes against the matters
brought to a vote at the Annual Meeting.
The
expense of soliciting proxies will
be borne by the Company. Proxies will be solicited principally by mail, but
directors, officers and regular employees of the Company or its subsidiaries
may
solicit proxies personally or by telephone. The Company will reimburse
custodians, nominees, or other persons for their out-of-pocket expenses in
sending proxy material to beneficial owners.
Regardless
of the number of
shares you own, it is important that they be represented at the Annual Meeting.
You are respectfully requested to sign, date and return the accompanying proxy
card at your earliest convenience.
ELECTION
OF DIRECTORS
Unless
you specify otherwise on the
accompanying proxy, the shares represented by the proxy will be voted for the
election of the listed nominees to serve as Directors until the next Annual
Meeting of Shareholders or until their successors are elected and qualified.
If
a quorum is present at the Meeting, the plurality of the votes cast by the
shares entitled to vote in the election of Directors at the Meeting is required
to elect each nominee.
Joseph
W. Armaly, age 69, is Chairman of the Board of Directors and Chief
Executive Officer of the Company and of Commercial Bank of Florida ("Bank"),
the
Company's wholly-owned subsidiary. Mr. Armaly served as President of
Merchants Bank of Miami ("Merchants") from 1965 through 1988 and also served
as
Chairman of Merchants' Board of Directors from 1980 through 1988.
Mr. Armaly was also President and Chairman of the Board of Florida
Commercial Banks, Inc. ("Florida Commercial") from 1980 through 1988.
Mr. Armaly has been Chairman of the Board of the Company and the Bank since
its formation in 1988.
Jack
J. Partagas, age 68, is a Director and the President, Chief Operating
Officer and Secretary of the Company and the Bank. Prior to joining the Company
and the Bank in 1988, Mr. Partagas was Vice President of Florida Commercial
between 1971 and 1988. Mr. Partagas has been a Director of the Company and
the Bank since 1988, Executive Vice President of the Company and the Bank from
1988 through 1992 and President of the Company and the Bank since
1992.
Cromwell
A. Anderson, age 80, is a Director of the Company and the Bank.
Mr. Anderson has been in the private practice of law since 1954.
Mr. Anderson retired from the law firm of Fowler, White, Burnett, Hurley,
Banick & Strickroot, P.A. in 1999. Mr. Anderson has been a Director of
the Company and the Bank since 1988.
Robert
Namoff, age 53, is a Director of the Company and the Bank. Mr. Namoff
is the Chairman of the Board of Allied Universal Corporation, a chemical
manufacturer. Mr. Namoff serves on the Board of Directors of the Chlorine
Institute in Washington, D.C. Mr. Namoff has been a Director of the
Company and the Bank since 1990.
Sherman
Simon, age 87, is a Director of the Company and the Bank. Mr. Simon
has been a private real estate investor for over 30 years. Mr. Simon has
been a Director of the Company and the Bank since 1988.
Michael
W. Sontag, age 60, is a Director of the Company and the Bank.
Mr. Sontag is an Architectural Engineer and a licensed general contractor.
Mr. Sontag has been a Director of the Company and the Bank since
1997.
Martin
Yelen, age 78, is a Director of the Company and the Bank and was formerly a
director of Florida Commercial. Mr. Yelen is a retired attorney who engaged
in private practice for 45 years with the firm of Yelen & Yelen, P.A.
Mr. Yelen has served on the Miami-Dade and Monroe County chapters of the
National Safety Council and was a councilman and Mayor of the City of West
Miami. Mr. Yelen has been a Director of the Company and the Bank since
1988.
The
Board of Directors recommends a vote "FOR" the election of all
nominees.
2
The
Board of Directors of the Company
consists of the same persons as the Board of Directors of the Bank. The Company
conducts its operations through the Bank, which is its wholly-owned subsidiary.
Both the Company and the Bank held twelve meetings of the Board of Directors
during 2005. Each director attended at least 75% of the board meetings that
were
held while he was serving as a director during the year, as well as attending
at
least 75% of the committee meetings of those committees of which the respective
director was a member. During 2005, the Company's Board of Directors had
standing Audit and Compensation Committees, and the Bank's Board of Directors
had standing Audit, Executive, Loan and Compliance Committees.
(a) Audit
Committee. The
Bank's Audit Committee consists of Messrs. Anderson, Namoff, Simon, Sontag
and
Yelen. These persons were all independent, non-employee directors of the Bank
and the Company. The Board of Directors has determined that each member of
the
Audit Committee is financially literate and independent in accordance with
NASDAQ's listing standards and that Mr. Namoff is an "audit committee financial
expert", as defined by the Securities and Exchange Commission ("SEC"). The
Audit
Committee held four meetings during 2005. The Audit Committee has functional
supervision over the internal audit staff, reviews the system of internal
controls and the adequacy of the internal audit system and receives reports
on
activities of the internal auditing department. It recommends the independent
registered public accounting firm to the Bank's and the Company's Boards of
Directors, approves all services provided by the independent registered public
accounting firm and related fees and reviews the scope of the audits and the
actual audits performed by both the independent registered public accounting
firm and the internal auditors. It is responsible for ensuring that the audit
findings are adequately addressed.
(b) Compensation
Committee. The Company's Compensation Committee consists of Messrs.
Anderson, Simon and Yelen. These persons are all independent, non-employee
directors of the Company and constitute three of the five non-employee directors
of the Board. The Compensation Committee held three meetings during 2005. The
Compensation Committee was delegated the duties of establishing and
administering an executive compensation program. Its activities include
reviewing and approving the design of the program, setting performance goals,
assessing executive performance and making grants of salary, bonuses and
incentive compensation. The Compensation Committee also administers the
2004 Employee Stock Option Plan.
(c) Nominating
Committee.
The Company has no formal nominating committee but rather the entire Board
of
Directors acts as the nominating committee. All of the director nominees of
the
Company set forth in Proposal I entitled "Election of Directors" were approved
by a majority of the independent, non-employee directors of the Company. Messrs.
Anderson, Namoff, Simon, Sontag and Yelen are all the independent, non-employee
directors of the Company. The Board of Directors believes it is appropriate
for
the Company to nominate its director nominees through a majority of the
independent directors of the full board and not a separate nominating committee
due to the efficiencies gained by not having a separate committee.
The
Board of Directors, several months
prior to the annual meeting of the shareholders, conducts a process of
identifying and evaluating Board nominees. The Board initially looks to
nominating its existing directors for re-election to the Board as appropriate
or
to other Director nominees proposed, as appropriate, by the Chairman of the
Board and in doing so considers each director's independence, if required,
skills, performance and attendance to the Board and respective committees.
The
Board of Directors will also consider candidates recommended by Shareholders
(see the caption "Shareholder Proposal" contained herein). In evaluating any
candidates for potential director nomination, the Board of Directors, and
specifically a majority of the independent, non-employee directors, will
consider candidates that are independent, if required, who possess personal
and
professional integrity, have good business judgment, relevant experience and
skills, including financial expertise, if required, and who would be effective
as a Director in conjunction with the full board and collectively serving the
long-term interests of the Company's shareholders. All candidates will be
reviewed in the same manner, regardless of the source of recommendation.
The
Company does not have a formal
policy regarding attendance by members of the Board of Directors at the Annual
Meeting of Shareholders, but it encourages its Directors to attend and
historically, most have done so. With respect to the 2005 Annual Shareholder
Meeting, all of the members of the Board of Directors, which at the time was
comprised of seven members, attended such Annual Shareholder
Meeting.
Directors
of the Company who are
salaried employees of the Bank do not receive any additional compensation for
serving as a director or committee member. During the year 2005, non-employee
directors of the Bank received a retainer of $5,000 per calendar quarter. The
Chairman of the Audit Committee received an additional retainer of $3,000 per
calendar year.
In
addition, each non-employee director
in office in June, 2005 received options to purchase 1,500 shares of Common
Stock for serving on the Board.
The
following report on the Audit
Committee is made pursuant to the rules of the SEC. The Audit Committee has
met
and held discussions with management and the independent registered public
accounting firm. Management represented to the Audit Committee that the
Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles and the Audit Committee has reviewed
and discussed the consolidated financial statements with management and the
independent registered public accounting firm. The Audit Committee discussed
with the independent registered public accounting firm matters required to
be
discussed by Statement on Auditing Standards No. 61, "Communication with Audit
Committees".
The
Audit Committee discussed with the
Company's internal audit staff and its independent registered public accounting
firm the overall scope and plans for their respective audits. The Audit
Committee meets with the internal audit staff and its independent registered
public accounting firm to discuss the results of their examinations, the
evaluations of the Company's internal controls and the overall quality of the
Company's financial reporting. The Audit Committee also approves all services
provided by the independent registered public accounting firm and related
fees.
The
Audit Committee has received the
written disclosures and the letter from the independent registered public
accounting firm required by Independence Standards Board Standard No. 1
"Independence Discussions with Audit Committees", as may be modified or
supplemented, and has discussed with the independent registered public
accounting firm the independent registered public accounting firm’s
independence. The members of the Audit Committee are independent as independence
is defined in Rule 4200(a)(14) of the National Association of Securities
Dealers.
Based
on the review and discussions
referred to above, the Audit Committee recommended to the Board of Directors
that the audited financial statements for the year ended December 31, 2005
be
included in the Company's Annual Report on Form 10-K for the year 2005, for
filing with the SEC.
AUDIT
COMMITTEE
Martin
Yelen, Chairman Sherman Simon
Cromwell
Anderson Michael
Sontag
Robert
Namoff
The
executive officers of the Company
are elected to their offices for one-year terms at the meeting of the Board
of
Directors in April of each year. The terms of any executive officers elected
after such date expire at the same time as the terms of the executive officers
elected at such date.
Joseph
W. Armaly, age 69, is Chairman of the Board of Directors and Chief
Executive Officer of the Company and the Bank. Mr. Armaly served as
President of Merchants from 1965 through 1988 and also served as Chairman of
Merchants' Board of Directors from 1980 through 1988. Mr. Armaly was also
President and Chairman of the Board of Florida Commercial from 1980 through
1988. Mr. Armaly has been Chairman of the Board of the Company and the Bank
since its formation in 1988.
Jack
J. Partagas, age 68, is a Director and the President, Chief Operating
Officer and Secretary of the Company and the Bank. Prior to joining the Company
and the Bank in 1988, Mr. Partagas was Vice President of Florida Commercial
between 1971 and 1988. Mr. Partagas has been a Director of the Company and
the Bank since 1988, Executive Vice President of the Company and the Bank from
1988 through 1992 and President of the Company and the Bank since
1992.
Bruce
P. Steinberger, age 52, was elected Executive Vice President of the Bank in
January of 1996. Mr. Steinberger was previously Executive Vice President
of
Intercontinental Bank from 1987-1995.
Barbara
E. Reed, age 42, was elected Senior Vice President and Chief Financial
Officer of the Company and the Bank in June of 1995. Ms. Reed previously served
the Bank as Vice President and Controller and as Auditor. Ms. Reed is a
Certified Public Accountant and prior to 1991, was employed by Coopers &
Lybrand LLP.
The
following table sets forth as of
December 31, 2005, all compensation paid during the Company's latest fiscal
year
to the Company's Chief Executive Officer and to those executive officers of
the
Company whose total annual compensation exceeded $100,000 in any of the last
three completed fiscal years.
|
Long-Term
|
||||||||||||||||
|
Compensation
|
||||||||||||||||
|
Number
of
|
||||||||||||||||
|
Securities
|
||||||||||||||||
|
Underlying
|
||||||||||||||||
|
Name
and Principal
|
Annual
Compensation
|
Options
|
All
Other
|
|||||||||||||
|
Position
(1)
|
Year
|
Salary
|
Bonus
|
Granted (2)
|
Compensation
(3)
|
|||||||||||
|
Joseph
W. Armaly
|
2005
|
$
|
390,000
|
$
|
200,000
|
2,500
|
$
|
7,873
|
||||||||
|
Chairman
and Chief
|
2004
|
$
|
360,000
|
$
|
180,000
|
3,500
|
$
|
7,556
|
||||||||
|
Executive
Officer of the
|
2003
|
$
|
340,000
|
$
|
180,000
|
6,250
|
$
|
6,621
|
||||||||
|
Company
and the Bank
|
||||||||||||||||
|
Jack
J. Partagas
|
2005
|
$
|
295,000
|
$
|
136,000
|
2,500
|
$
|
6,444
|
|
|||||||
| President and Chief |
2004
|
$
|
275,000
|
$
|
120,000
|
3,500
|
$
|
5,962
|
||||||||
|
Operating
Officer of the
|
2003
|
$
|
255,000
|
$
|
120,000
|
6,250
|
$
|
5,029
|
||||||||
|
Company
and the Bank
|
||||||||||||||||
|
Bruce
P. Steinberger
|
2005
|
$
|
240,000
|
$
|
88,000
|
2,000
|
$
|
13,800
|
||||||||
|
Executive
Vice President
|
2004
|
$
|
220,000
|
$
|
75,000
|
2,500
|
$
|
12,800
|
||||||||
|
of
the Bank
|
2003
|
$
|
200,000
|
$
|
75,000
|
3,125
|
$
|
11,217
|
||||||||
|
Barbara
E. Reed
|
2005
|
$
|
170,000
|
$
|
50,000
|
2,000
|
$
|
7,144
|
||||||||
|
Senior
Vice President
|
2004
|
$
|
150,000
|
$
|
40,000
|
2,500
|
$
|
6,616
|
||||||||
|
and
Chief Financial Officer
|
2003
|
$
|
130,000
|
$
|
40,000
|
3,125
|
$
|
6,096
|
||||||||
|
of
the Company and
the Bank
|
||||||||||||||||
| (1) |
All
compensation or remuneration paid to employees is paid by the Bank.
At the
present time, there are no separate employees of the Company and
there is
no compensation paid by the
Company.
|
| (2) |
Gives
effect to the dilutive adjustments which were made with respect to
such
options as a result of a five-for-four stock split declared by the
Company
in December, 2003.
|
| (3) |
The
Bank has adopted a plan pursuant to the provisions of Section 401(k)
of
the Internal Revenue Code in which after one year of employment,
all
employees of the Bank are eligible to participate. The Bank, in its
discretion, may match any amounts deferred by employees. The amount
of
contribution made by the Bank with respect to all employees was
approximately $225,000 in 2005, $220,000 in 2004 and $188,000 in
2003.
|
|
Number
of
|
%
of Total
|
Potential
Realizable
Value
at Assumed
Annual
Rates of Stock
Price
Appreciation for
Option
Term
|
|||||||||||||||||
|
Securities
|
Options
|
||||||||||||||||||
|
Underlying
|
Granted
to
|
Exercise
|
|||||||||||||||||
|
Options
|
Employees
in
|
or
Base
|
Expiration
|
||||||||||||||||
|
Name
|
Granted (1)
|
Fiscal
Year
|
Price
|
Date
(2)
|
|||||||||||||||
|
5%
|
10%
|
||||||||||||||||||
|
Joseph
W. Armaly
|
2,500
|
10.0
|
%
|
|
$
|
38.85
|
June
1, 2015
|
|
$61,081
|
|
$154,792
|
||||||||
|
Jack
J. Partagas
|
2,500
|
10.0
|
%
|
|
$
|
38.85
|
June
1, 2015
|
|
$61,081
|
|
$154,792
|
||||||||
|
Bruce
P. Steinberger
|
2,000
|
8.0
|
%
|
|
$
|
38.85
|
June
1, 2015
|
|
$48,865
|
|
$123,834
|
||||||||
|
Barbara
E. Reed
|
2,000
|
8.0
|
%
|
|
$
|
38.85
|
June
1, 2015
|
|
$48,865
|
$123,834
|
|||||||||
_______________________________
| (1) |
The
Company's form of option agreement provides for early termination
in the
event the option holder's employment is terminated, the option holder
dies
or the option holder becomes permanently or totally disabled. The
options
may not be exercised until at least one year from the date of grant,
which
was June 1, 2005.
|
|
Number
of Securities
|
Value
of Unexercised
|
||||||||||||
|
Underlying
Unexercised
|
In-the-Money
Options
|
||||||||||||
|
Options
at Year
End
|
at
Year
End ($)
|
||||||||||||
|
Shares
|
|||||||||||||
|
Acquired
on
|
Value
|
Exercisable/
|
Exercisable
and
|
||||||||||
|
Name
|
Exercise
|
Realized
|
Unexercisable
(1)
|
Unexercisable
|
|||||||||
| Joseph W. Armaly |
12,070
|
$
|
376,707
|
58,614/2,500
|
$
|
1,185,377
|
|||||||
|
Jack
J. Partagas
|
11,395
|
$
|
357,000
|
72,384/2,500
|
$
|
1,572,727
|
|||||||
|
Bruce
P. Steinberger
|
-
|
$
|
-
|
30,993/2,000
|
$
|
583,735
|
|||||||
|
Barbara
E. Reed
|
2,000
|
$
|
56,059
|
32,622/2,000
|
$
|
682,131
|
|||||||
__________________
| (1) |
The
number of shares underlying the stock options described in this table
gives effect to the dilutive adjustments which were made as a result
of stock dividends and stock
splits.
|
The following
table sets forth information regarding our compensation plans (including
individual compensation arrangements) under which shares of our Common Stock
are
authorized for issuance as of December 31, 2005:
6
|
|
Number
of Securities
|
|||||||||||||
|
Remaining
Available for
|
||||||||||||||
|
Number
of Securities
|
Weighted
Average
|
Future
Issuance Under
|
||||||||||||
|
|
to
be Issued Upon
|
Exercise
Price
|
Equity
Compensation Plans
|
|||||||||||
|
|
Exercise
of
|
of
Outstanding
|
[Excluding
Securities
|
|||||||||||
|
Plan
Category
|
Outstanding
Options (a)
|
Options
|
Reflected
in Column (a)]
|
|||||||||||
|
Equity
compensation plans
|
||||||||||||||
|
approved
by security holders:
|
||||||||||||||
|
1994
Performance Plan and
|
||||||||||||||
|
1994
Outside Director Plan
|
541,468
|
(1) |
|
|
$
14.87
|
-
|
||||||||
|
2004
Employee Plan and
|
||||||||||||||
|
2004
Outside Director Plan
|
74,000
|
(2) |
|
|
30.81
|
224,000
|
||||||||
|
Equity
compensation plans
|
||||||||||||||
|
not
approved by security holders
|
-
|
-
|
-
|
|||||||||||
|
615,468
|
$16.79
|
224,000
|
||||||||||||
______________________
| (1) |
Represents
options to purchase 281,116 shares of Common Stock which have previously
been granted and which remain outstanding under our 1994 Performance
Stock
Option Plan and options to purchase 260,352 shares of Common Stock
which
have previously been granted and which remain outstanding under our
1994
Outside Director Stock Option Plan. The 1994 Performance Stock Option
Plan
and the 1994 Outside Director Stock Option Plan expired in the first
quarter of 2004. Therefore, there are no securities reserved for
future
issuance under these plans.
|
| (2) |
Represents
options to purchase 54,000 shares of Common Stock which have previously
been granted and which remain outstanding under our 2004 Employee
Stock
Option Plan and options to purchase 20,000 shares of Common Stock
which
have previously been granted and which remain outstanding under our
2004
Outside Director Stock Option Plan. The 2004 Employee Stock Option
Plan
initially had 250,000 and 50,000, respectively, shares of Common
Stock
reserved for issuance.
|
The
Company and the Bank have entered
into employment agreements with Messrs. Armaly and Partagas. The Bank has
entered into employment agreements with Mr. Steinberger and Ms. Reed. These
agreements, which are summarized below, are intended to assure the Company
and
the Bank of the continued services of its key officers.
With
respect to Messrs. Armaly and
Partagas, the agreements entered into as of March 18, 1994 provide that each
officer shall be employed by the Company and the Bank in his current position
for a period of three (3) years. On March 31, 1995 the term was extended
automatically for one additional year and on each subsequent March 31 the term
is automatically extended for one additional year such that after each March
31
extension the term of the agreement is a full three years. Compensation and
benefits are to be determined by the Board of Directors of the Company, provided
that the officer's participation in employee benefit plans and arrangements
shall provide benefits at least equal to those provided to all other employees
of the Company. In the event that the officer's employment is terminated (except
for death, disability, or cause) or if the officer terminates his employment
because of a reduction in position, responsibility, salary, or for any other
good reason, as defined in the agreement, and including a change in control
of
the Company, the officer is entitled to severance benefits equal to three year's
salary and cash incentive compensation plus the option to continue to receive
fringe benefits for an additional three years or an additional sixty (60%)
percent of annual salary and cash incentive compensation in lieu of fringe
benefits. In the event the officer terminates his employment other than for
good
reason, as defined in the agreement, the officer is entitled to severance
benefits equal to one year's salary and cash incentive compensation, plus an
additional twenty (20%) percent in lieu of fringe benefits. Such severance
benefits will be based upon the executive's then current salary and the
aggregate cash incentive compensation last paid to or earned by the officer
in
the immediately preceding twelve months prior to termination. In the event
that
any of such payments constitute "parachute payments" under Section 280G of
the
Internal Revenue Code and therefore are subject to the excise tax on "excess
parachute payments" under Section 4999 of the Internal Revenue Code, the
agreements provide that the Company will pay an additional cash amount, as
determined by a formula set forth in the agreements, sufficient to pay both
the
excise tax and any additional amounts which become due as the result of the
payment of the excise tax, to put the officer in the same position as though
no
excise tax had been imposed.
7
With
respect to Mr. Steinberger, the agreement entered into as of December 18, 1998
provides that he shall be employed by the Bank in his current position for
a
period of one year. On December 18, 1999 the term was extended automatically
for
one additional year and on each subsequent December 18 the term is automatically
extended for one additional year. Compensation and benefits are to be determined
by the Board of Directors of the Bank, provided that the officer’s participation
in employee benefit plans and arrangements shall provide benefits at least
equal
to those provided to all other employees of the Bank. In the event that the
officer’s employment is terminated (except for death, disability, or cause) or
if the officer terminates his employment because of a reduction in position,
responsibility, salary, or for any other good reason, as defined in the
agreement, Mr. Steinberger is entitled to severance benefits equal to his base
salary and cash incentive compensation through and including the scheduled
termination date of this agreement, as extended. If the agreement is terminated
by Mr. Steinberger pursuant to a change in control of the Company, Mr.
Steinberger is entitled to severance benefits equal to two year’s salary and
cash incentive compensation plus the option to continue to receive fringe
benefits for an additional two years or an additional forty (40%) percent of
annual salary and cash incentive compensation in lieu of fringe benefits. In
the
event that Mr. Steinberger terminates his employment other than for good reason,
as defined in the agreement, the officer is entitled to severance benefits
equal
to his base salary and cash incentive compensation through and including the
date of termination. Such severance benefits will be based upon Mr.
Steinberger’s then current salary and the aggregate cash incentive compensation
last paid to or earned by the officer in the immediately preceding twelve months
prior to termination. In the event that any of such payments constitute
“parachute payments” under Section 280G of the Internal Revenue Code and
therefore are subject to the excise tax on “excess parachute payments” under
Section 4999 of the Internal Revenue Code, the agreements provide that the
Bank
will pay an additional cash amount, as determined by a formula set forth in
the
agreements, sufficient to pay both the excise tax and any additional amounts
which become due as the result of the payment of the excise tax, to put the
officer in the same position as though no excise tax had been
imposed.
With
respect to Ms. Reed, the agreement
entered into as of February 5, 1997 provides that she shall be employed by
the
Bank in her current position for a period of one year. On December 14, 1997
the
term was extended automatically for one additional year and on each subsequent
December 14 the term is automatically extended for one additional year.
Compensation and benefits are to be determined by the Board of Directors of
the
Bank, provided that the officer's participation in employee benefit plans and
arrangements shall provide benefits at least equal to those provided to all
other employees of the Bank. In the event that the officer's employment is
terminated (except for death, disability, or cause) or if the officer terminates
her employment because of a reduction in position, responsibility, salary,
or
for any other good reason, as defined in the agreement, Ms. Reed is entitled
to
severance benefits equal to her base salary and cash incentive compensation
through and including the scheduled termination date of this agreement, as
extended. If the agreement is terminated by Ms. Reed pursuant to a change in
control of the Company, Ms. Reed is entitled to severance benefits equal to
twelve times her then current monthly salary. In the event that Ms. Reed
terminates her employment other than for good reason, as defined in the
agreement, the officer is entitled to severance benefits equal to her base
salary and cash incentive compensation through and including the date of
termination. Such severance benefits will be based upon Ms. Reed's then current
salary and the aggregate cash incentive compensation last paid to or earned
by
the officer in the immediately preceding twelve months prior to
termination.
1. Performance
and Policies.
The
Compensation Committee of the Board
of Directors of the Company oversees and administers the Company's executive
compensation programs. All members of the Compensation Committee are outside
directors who are not eligible to participate in any of the compensation
programs that the Committee oversees. The Compensation Committee recommends
and
the Board of Directors determines, based on such recommendations, compensation
for the Chairman. Compensation levels for the other executive officers of the
Company are determined by the Compensation Committee, based on the
recommendations of the Chairman.
The
Company's executive compensation
program is designed to attract, retain, motivate and appropriately reward
individuals who are responsible for the Company's short- and long-term
profitability, growth and return to shareholders. It is also designed to align
the interests of high level employees with those of the shareholders.
Compensation for Company executive officers consists of base compensation,
annual cash incentive awards and long-term incentive awards in the form of
stock
options. Executive officers also participate in a savings incentive plan and
a
medical plan available to employees generally.
The
determination of base compensation
increases, annual cash incentive awards and long-term incentive awards is based
upon the performance of the Company, the contribution of each individual to
that
performance and consideration for economic conditions and events which may
impact the future performance of the Company. Individual contribution is
assessed based upon factors such as level of responsibility, job complexity
and
the importance of the position in the structure of the Company and the Bank.
Individual contribution is also judged more subjectively based upon the
Compensation Committee's overall evaluation of the officer's professionalism
and
professional growth, judgment, business acumen and ability and effort. The
Compensation Committee also compares, on a random and subjective basis, the
salaries of the executive officers with the salaries of executive officers
of
other bank holding companies of comparable size. Finally the Compensation
Committee considers whether compensation increases are fair and equitable based
upon individual performance and a comparison with peers. Although the components
of compensation (base compensation, annual cash incentive awards, and long-term
incentive awards) are reviewed separately, compensation decisions are made
based
on a review of total compensation.
| (a) |
Base
Compensation. Pay levels for each executive are set annually at the
beginning of the fiscal year and are based primarily on the performance
of
the Company during the prior fiscal year. The Compensation Committee
considers factors such as earnings per share, pre-tax earnings, net
profits and return on equity. Secondarily, the Compensation Committee
considers individual performance in light of each executive's job
responsibilities. In determining the base salaries for 2005, the
Compensation Committee took into account the Company's performance
during
2004. Specifically, net income increased 10% during 2004, return
on
average assets and equity were 1.35% and 16.12%, respectively, credit
performance remained strong; diluted earnings per common share increased
from $1.69 in 2003 to $1.82 in 2004; average loans increased by 15%
from
2003 to 2004; and average total deposits increased by 12% from 2003
to
2004.
|
| (b) |
Annual
Cash Incentive Awards. Annual cash incentive awards to the Company's
executive officers are granted at the discretion of the Compensation
Committee and are determined at the end of the fiscal year. The
determination of the amount of such awards is made by the Compensation
Committee based upon the performance of the Company and on a subjective
basis as indicated above. For purposes of determining the level of
the
annual cash incentive awards to be paid to senior executives for
2005, it
was the Compensation Committee's view that the Company's 2005 results
represented a strong performance. The Compensation Committee noted
the
following factors in support of its findings: net income increased
7%
during 2005; return on average assets and equity were 1.27% and 15.53%;
credit performance remained excellent; diluted earnings per common
share
increased from $1.82 in 2004 to $1.93 in 2005; the senior executive
officers were successful in implementing the growth strategy of the
Bank,
as average loans increased by 10% from 2004 to 2005; and average
total
deposits increased 14% from 2004 to
2005.
|
| (c) |
Stock
Option Awards. The Compensation Committee also uses stock options to
reward management and to link them to the long-term results and
stockholder interests of the Company. Option grants are usually determined
in the spring of each fiscal year. The levels of option grants are
determined at the discretion of the Compensation Committee on a subjective
basis. Previous grants of stock options are reviewed but are not
considered the most important factor in determining the size of any
executive's stock option award in a particular year. In determining
the
levels of option grants for 2005, the Compensation Committee considered
the performance of the Company for fiscal year 2004, the performance
of
the Company for the beginning of 2005, and efforts and initiatives
by the
executive officers to implement and support the strategic objectives
of
the Bank.
|
2. CEO
Compensation.
Joseph
Armaly is eligible to
participate in the same executive compensation program available to the other
executive officers within the Company. His 2005 base salary was set at $390,000,
as compared to $360,000 in 2004. Mr. Armaly’s base salary was based primarily on
the Company’s performance during 2004; specifically, net income increased 10%
during 2004; return on average assets and equity were 1.35% and 16.12%
respectively; credit performance remained strong; diluted earnings per common
share increased from $1.69 in 2003 to $1.82 in 2004; average loans increased
by
15% from 2003 to 2004; and average total deposits increased by 12% from 2003
to
2004.
9
The
stock option grants made to
Mr. Armaly in 2005 were based on the analysis discussed above for fiscal
year 2004, together with performance of the Company for the first half of 2005.
In June 2005, Mr. Armaly was awarded ten-year options covering 2,500
shares. The terms and conditions of this grant were consistent with the grants
to all other executive officers.
In
December, 2005, Mr. Armaly
received an annual cash incentive award of $200,000. This annual cash incentive
award was based upon the Company's performance during the 2005 fiscal year
and
the individual performance of the executive. In determining this award, the
Compensation Committee considered the increase in the Company's earnings during
2005. Specifically, the Compensation Committee considered the following factors:
net income increased 7% during 2005; return on average assets and equity were
1.27% and 15.53%; diluted earnings per common share increased from $1.82 in
2004
to $1.93 in 2005; the Bank was successful in implementing its growth strategy,
as average loans increased by 10% from 2004 to 2005; and average total deposits
increased 14% from 2004 to 2005.
COMPENSATION
COMMITTEE
Cromwell
A. Anderson,
Chairman
Sherman
Simon
Martin
Yelen
The
following graph compares cumulative
five-year shareholder returns (including reinvestment of dividends) on an
indexed basis with the Center for Research in Security Prices ("CRSP") Index
for
the NASDAQ Stock Market (U.S. Companies) and the CRSP Index for NASDAQ Bank
Stocks (SIC codes 602 and 671). These indices are included for comparative
purposes only, and do not necessarily reflect management's opinion that such
indices are an appropriate measure of the relative performance of the stock
involved and are not intended to forecast or be indicative of possible future
performance of the Common Stock. The graph assumes that the value of an
investment in the Common Stock and in each index was $100 on December 31, 2000,
and that all dividends were reinvested.
Comparison
of Five-Year Cumulative Return
Commercial
Bankshares, Inc., Common Stock
The
table
below indicates options granted and outstanding under the 1994 and 2004 Outside
Director Stock Option Plans, the 1994 Performance Stock Option Plan and the
2004
Employee Stock Option Plan as of December 31, 2005:
|
Number
of
|
||||
|
|
Options
Granted
|
|||
|
Name
and Position
|
and
Outstanding
|
|||
|
Executive
officer group
|
203,613
|
|||
|
Non-executive
director group
|
280,352
|
|||
|
Non-executive
officer employee group
|
131,503
|
|||
|
Total
options granted
|
615,468
|
|||
|
Executive
Officers
|
||||
|
Joseph
W. Armaly
|
61,114
|
|||
|
Chairman
and CEO
|
|
|||
|
Jack
J. Partagas
|
74,884
|
|||
|
President
and COO
|
||||
|
Bruce
P. Steinberger
|
32,993
|
|||
|
Executive
Vice President
|
||||
|
Barbara
E. Reed
|
34,622
|
|||
|
Senior
Vice President and CFO
|
||||
|
Nominees
for Director
|
||||
|
Joseph
W. Armaly
|
61,114
|
|||
|
Jack
J. Partagas
|
74,884
|
|||
|
Cromwell
A. Anderson
|
63,619
|
|||
|
Robert
Namoff
|
63,619
|
|||
|
Sherman
Simon
|
63,619
|
|||
|
Michael
W. Sontag
|
25,876
|
|||
|
Martin
Yelen
|
63,619
|
No
member of the Compensation Committee
was an officer or employee of the Company or of any of its subsidiaries during
the prior year or was formerly an officer of the Company or any of its
subsidiaries. During the last fiscal year, none of the executive officers of
the
Company have served on the Board of Directors or Compensation Committee of
any
other entity, any of whose officers served either on the Board of the Company
or
on the Compensation Committee of the Company.
The
following table sets forth certain
information regarding the beneficial ownership of the Company's outstanding
Common Stock as of March 1, 2006, by (i) one person known to the Company to
be
the beneficial owner of more than 5% of the Company's Common Stock, (ii) each
director and executive officer of the Company and (iii) the directors and the
executive officers of the Company as a group. Except as otherwise indicated,
the
persons named in the table have sole voting and investment power with respect
to
all shares of Common Stock owned by them.
|
Current
Beneficial Ownership as of March 1, 2006
|
||||||||||
|
Number
of
|
Percent
of
|
|||||||||
|
Name
and Address of Beneficial Owner
|
Shares
(1)
(9)
|
Class*
|
||||||||
|
(a)
Certain beneficial owners:
|
||||||||||
|
John
Hancock Advisors, LLC (2)
|
383,710
|
5.92
|
%
|
|||||||
|
101
Huntington Avenue
|
||||||||||
|
Boston,
MA 02199
|
||||||||||
|
(b)
Directors:
|
||||||||||
|
Cromwell
A. Anderson
|
226,132
|
(3) |
3.49
|
%
|
||||||
|
1550
S.W. 57th Avenue
|
||||||||||
|
Miami,
Florida 33144
|
||||||||||
|
Joseph
W. Armaly
|
306,268
|
(4) |
4.72
|
%
|
||||||
|
1550
S.W. 57th Avenue
|
||||||||||
|
Miami,
Florida 33144
|
||||||||||
|
Robert
Namoff
|
191,399
|
(3) |
2.95
|
%
|
||||||
|
1550
S.W. 57th Avenue
|
||||||||||
|
Miami,
Florida 33144
|
||||||||||
|
Jack
J. Partagas
|
100,999
|
(5) |
1.56
|
%
|
||||||
|
1550
S.W. 57th Avenue
|
||||||||||
|
Miami,
Florida 33144
|
||||||||||
|
Sherman
Simon
|
247,988
|
(3) |
3.83
|
%
|
||||||
|
1550
S.W. 57th Avenue
|
||||||||||
|
Miami,
Florida 33144
|
||||||||||
|
Michael
W. Sontag
|
70,597
|
(6) |
1.09
|
%
|
||||||
|
1550
S.W. 57th Avenue
|
||||||||||
|
Miami,
Florida 33144
|
||||||||||
|
Martin
Yelen
|
109,188
|
(3) |
1.68
|
%
|
||||||
|
1550
S.W. 57th Avenue
|
||||||||||
|
Miami,
Florida 33144
|
||||||||||
|
(c)
Executive officers listed in Summary
|
||||||||||
|
Compensation
table who are not Directors:
|
||||||||||
|
Barbara
E. Reed
|
45,463
|
(7)
|
**
|
|||||||
|
1550
S.W. 57th Avenue
|
||||||||||
|
Miami,
Florida 33144
|
||||||||||
|
Bruce
P. Steinberger
|
55,824
|
(8)
|
**
|
|||||||
|
1550
S.W. 57th Avenue
|
||||||||||
|
Miami,
Florida 33144
|
||||||||||
|
All
directors and the executive officers
|
1,353,858
|
20.89
|
%
|
|||||||
|
as
a group (9 persons)
|
||||||||||
________________________________
* Percentages
of shares beneficially owned are based upon 6,034,369 shares of Common Stock
outstanding as of March 1, 2006 plus, for each person named above, any shares
of
Common Stock that may be acquired by such person within 60 days of such date
upon exercise of outstanding options or other rights. Options granted
under the Outside Director Plan vest immediately.
** Less
than 1%.
| (1) |
In
accordance with Rule 13d-3 promulgated pursuant to the Securities
Exchange
Act of 1934, a person is deemed to be the beneficial owner of a security
for purposes of the rule if he or she has or shares voting power
or
investment power with respect to such security or has the right to
acquire
such ownership within 60 days. As used herein, "voting power" is
the power
to vote or direct the voting of shares, and "investment power" is
the
power to dispose or direct the disposition of shares, irrespective
of any
economic interest therein.
|
| (2) |
Through
their parent-subsidiary relationship to John Hancock Advisors, LLC.,
John
Hancock Life Insurance Company, John Hancock Subsidiaries, LLC.,
John
Hancock Financial Services, Inc. and The Berkeley Financial Group,
LLC
have indirect Beneficial ownership of these same
shares.
|
|
(3)
|
Includes
options granted to purchase 63,619 shares of Common Stock.
|
|
(4)
|
Includes
options granted to purchase 58,614 shares of Common Stock. Does not
include 45,196 shares held of record by Mr. Armaly's wife. Mr. Armaly
disclaims beneficial ownership of all such shares. Inclusion of such
shares would result in Mr. Armaly owning 351,464 shares or 5.42% and
all directors and executive officers owning as a group 1,399,054
shares or
21.58% of the total issued and outstanding shares of Common
Stock.
|
|
(5)
|
Includes
options granted to purchase 72,384 shares of Common Stock.
|
|
(6)
|
Includes
options granted to purchase 23,376 shares of Common Stock.
|
|
(7)
|
Includes
options granted to purchase 29,374 shares of Common Stock.
|
|
(8)
|
Includes
options granted to purchase 30,993 shares of Common Stock.
|
|
(9)
|
The
number of shares underlying the stock options described in this table
and
the foregoing footnotes, and the exercise prices for such shares,
give
effect to the dilutive adjustments, which were made with respect
to such
options as a result of the 5% stock dividends which were declared
by the
Company in each of December, 1996, December, 1997, December, 1998
and
December, 1999 and five-for-four stock splits declared in December,
2002
and December, 2003.
|
Section
16(a) of the Securities
Exchange Act of 1934 requires the Company's officers (as defined in Rule
16a-1(f)), directors, and persons owning more than ten percent of a registered
class of the Company's equity securities to file reports of ownership and
changes of ownership with the SEC. Such persons are required by SEC regulations
to furnish the Company with all Section 16(a) forms they file. Based solely
upon
a review of the copies of forms furnished to the Company, the Company believes
that during the 2005 fiscal year, all filing requirements applicable to its
officers and directors and 10% shareholders were met.
The
Audit Committee has appointed Crowe
Chizek and Company LLC, Independent Registered Public Accounting Firm, to audit
the financial statements of the Company and the Bank for the fiscal year ending
December 31, 2006, and to perform such other services as may be required of
them. Representatives of Crowe Chizek and Company LLC will be present at the
2006 Annual Meeting and will have an opportunity to make a statement if they
desire to do so and to respond to appropriate questions raised at the
meeting. If the shareholders do not ratify such appointment, it will be
reconsidered by the Board of Directors.
Principal
Accounting Firm Fees
The
following table presents the
aggregate fees billed to the Company by Crowe Chizek and Company LLC, for the
audit of the Company’s annual financial statements for the fiscal year ended
12/31/2005 and by PricewaterhouseCoopers, LLP, for the audit of the Company’s
annual financial statements for the fiscal year ended December 31, 2004 and
other services provided during those periods:
|
December
|
|||||||
|
2005
|
2004
|
||||||
|
Audit
Fees(1)
|
$
|
183,500
|
$
|
337,000
|
|||
|
Audit-Related
Fees (2)
|
11,500
|
15,000
|
|||||
|
Tax
Fees (3)
|
28,875
|
17,650
|
|||||
|
All
Other Fees
|
-
|
-
|
|||||
|
Total
Fees
|
$
|
223,875
|
$
|
369,650
|
|||
____________________________
|
(1)
|
Audit
Fees consist of fees billed for services rendered for the annual
audit of
the Company’s consolidated financial statements, the audit of management’s
assessment of internal control over financial reporting, the review
of
condensed consolidated financial statements included in the Company’s
quarterly reports on Form 10-Q and services that are normally provided
in
connection with statutory and regulatory filings or
engagements.
|
|
(2)
|
Audit-Related
Fees consist of fees billed for assurance and related services that
are
reasonably related to the performance of the audit or review of the
Company’s consolidated financial statements that are not reported under
the caption “Audit Fees”. The category includes fees related to audit of
the Company's retirement plan and consultation related to acquisitions
or
other business transactions.
|
|
(3)
|
Tax
Fees consist of fees billed for services rendered for tax compliance,
tax
advice and tax planning. The 2005 figure includes billings by
PricewaterhouseCoopers in 2005 for the 2004 tax return and billings
by
Crowe Chizek in 2005 for the 2005 tax
return.
|
Pre-approval
of Services Provided by the Independent Auditor
The
Audit
Committee has adopted a policy to pre-approve all audit and permissible
non-audit services provided by the independent auditor. The Audit Committee
will
consider annually and, if appropriate, approve the scope of the audit services
to be performed during the fiscal year as outlined in an engagement letter
proposed by the independent auditor. For permissible non-audit services, the
Company will submit to the Audit Committee, at least annually, a list of
services and a corresponding budget estimate that it recommends the Audit
Committee engage the independent auditor to provide. To facilitate the prompt
handling of certain unexpected matters, the Audit Committee delegates to its
Chairman the authority to approve in advance all audit and non-audit services
below $2,000 to be provided by the independent auditor if presented to the
full
Audit Committee at the next regularly scheduled meeting. The Company will
routinely inform the Audit Committee as to the extent of services provided
by
the independent auditor in accordance with this pre-approval policy and the
fees
incurred for the services performed to date.
The
Bank has had and expects to have in
the future various loan and other banking transactions in the ordinary course
of
business with directors, executive officers, and principal shareholders of
the
Bank and the Company (or associates of such persons). In the opinion of
management, all such transactions: (i) have been and will be made in the
ordinary course of business; (ii) have been and will be made on substantially
the same terms, including interest rates and collateral on loans, as those
generally prevailing at the time for comparable transactions with unrelated
persons; and (iii) do not involve more than the normal risk of collectibility
or
present other unfavorable features. The total amount of extensions of credit
to
directors, executive officers, those stockholders named in the table in
"Security Ownership of Certain Beneficial Owners and Management", and any of
their associates was $3.7 million as of February 28, 2006, which represented
approximately 4.6% of total shareholders equity.
Any
shareholder of the Company who
wishes to communicate with the Board of Directors, a committee of the Board,
the
non-management Directors as a group or any member of the Board, may send
correspondence to the Chief Financial Officer at Commercial Bankshares, Inc.,
1550 S.W. 57th Avenue, Miami, Florida 33144. The Chief Financial Officer will
forward such communication to the Board of Directors or as appropriate to the
particular committee Chairman, unless the communication is a personal or similar
grievance, a shareholder proposal or related communication, an abusive or
inappropriate communication or a communication not related to the duties or
responsibilities of the Board of Directors, in which case the Chief Financial
Officer has the authority to disregard the communication. All such
communications will be kept confidential to the extent possible. The Chief
Financial Officer will maintain a log of, and copies of, all communications
for
inspection and review by any Board member, and will regularly review all such
communications with the Board Chairman.
As
of the date of this Proxy Statement,
the Board of Directors does not know of any other business to be presented
at
the meeting and does not intend to bring before the meeting any matter other
than the proposals described herein. However, if any other business should
come
before the meeting or any adjournments thereof, the persons named in the
accompanying proxy will have discretionary authority to vote all
proxies.
Proposals
on matters appropriate for
shareholder consideration consistent with the regulations of the SEC submitted
by shareholders for inclusion in the proxy statement and form of proxy for
the
2007 Annual Meeting of Shareholders must be received at the Company's principal
executive offices on or before November 20, 2006. Such shareholder proposals
may
be mailed to Barbara E. Reed, Senior Vice President and Chief Financial Officer,
Commercial Bankshares, Inc., 1550 S.W. 57th Avenue, Miami, Florida
33144.
A
copy of the Company's Annual Report
to Shareholders for the fiscal year ended December 31, 2005 is being provided
to
each shareholder simultaneously with delivery of this proxy statement.
Additional copies of the Annual Report to Shareholders or copies of the
Company's Annual Report on Form 10-K, filed with the SEC, may be obtained by
writing Barbara E. Reed, Commercial Bankshares, Inc., 1550 S.W. 57th Avenue,
Miami, Florida 33144. Copies of such reports are also available electronically
at the SEC’s internet website www.sec.gov, or via the Company’s website at
www.commercialbankfl.com.
COMMERCIAL
BANK OF FLORIDA
AUDIT
COMMITTEE CHARTER
The
Audit
Committee is appointed by the Board of Directors to assist the Board in
monitoring (1) the integrity of the financial statements of the Company, (2)
compliance by the Company with legal and regulatory requirements and (3) the
independence and performance of the Company’s internal and external auditors.
The
members of the Audit Committee shall meet the independence and experience
requirements of the regulatory agencies. The members of the Audit Committee
shall be appointed by the Board of Directors.
The
Audit
Committee shall have the authority to retain special legal, accounting or other
consultants to advise the Committee. The Audit Committee may request any officer
or employee of the Company or the Company’s outside counsel or independent
auditor to attend a meeting of the Committee or to meet with any members of,
or
consultants to, the Committee.
The
Audit
Committee shall:
| 1. |
Review
and reassess the adequacy of this Charter annually and recommend
any
proposed changes to the Board for approval.
|
| 2. |
The
Audit Committee shall be directly responsible for the appointment,
compensation and oversight of the independent auditor. The independent
auditor shall report directly to the Audit
Committee.
|
| 3. |
Review
the annual audited financial statements with management, including
major
issues regarding accounting and auditing principles and practices,
as well
as, the adequacy of internal controls.
|
| 4. |
Review
an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company’s financial statements.
|
| 5. |
Prior
to release of the quarterly earnings, review any significant financial
statement adjustments with management and the independent auditor.
|
| 6. |
Review
major changes to the Company’s auditing and accounting principles and
practices as suggested by the independent auditor, internal auditors
or
management.
|
| 7. |
Approve
the fees to be paid to the independent auditor. The Audit Committee
will
also approve all other non-audit services, in advance, performed
by the
independent auditor.
|
| 8. |
Receive
periodic reports from the independent auditor regarding the auditor’s
independence, discuss such reports with the auditor and, if so determined
by the Audit Committee, recommend that the Board take appropriate
action
to satisfy itself of the independence of the auditor.
|
| 9. |
Evaluate,
together with the Board, the performance of the independent auditor
and,
if so determined by the Audit Committee, recommend that the Board
replace
the independent auditor.
|
| 10. |
Review
the appointment and replacement of the senior internal audit executive.
|
| 11. |
Review
the significant reports to management prepared by the internal auditing
department and management’s responses.
|
| 12. |
Meet
with the independent auditor prior to the audit to review the planning
and
staffing of the audit.
|
| 13. |
Discuss
with the independent auditor the matters required to be discussed
by
Statement of Auditing Standards No. 61 relating to the conduct of
the
audit.
|
| 14. |
Review
with the independent auditor any problems or difficulties the auditor
may
have encountered and any management letter comments provided by the
auditor and the Company’s response to that letter. Such review should
include:
|
| a. |
Any
difficulties encountered in the course of the audit work, including
restrictions on the scope of activities or access to required information.
|
| b. |
Any
changes required in the planned scope of the internal audit.
|
| c. |
The
internal audit department responsibilities, budget and staffing.
|
| 15. |
Prepare
the report required by the rules of the Securities and Exchange Commission
to be included in the Company’s annual proxy statement.
|
| 16. |
Advise
the Board with respect to the Company’s policies and procedures regarding
compliance with applicable laws and regulations and with the Company’s
Code of Ethics.
|
| 17. |
Review
with the Company’s general counsel legal matters that may have a material
impact on the financial statements, the Company’s compliance policies and
any material reports on inquires received from regulators or governmental
agencies.
|
| 18. |
The
Audit Committee shall review any employee complaints or concerns
regarding
questionable accounting, internal control or auditing matters. Such
complaints shall be treated confidentially and shall be independently
investigated.
|
While
the
Audit Committee has the responsibilities and powers set forth in this Charter,
it is not the duty of the Audit Committee to plan or conduct audits or to
determine that the Company’s financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor.
ii
PROXY
COMMERCIAL
BANKSHARES, INC.
1550
S.W. 57th
Avenue, Miami, Florida 33144
This
Proxy is solicited on behalf of the Board of Directors
The
undersigned hereby appoints JOSEPH W. ARMALY and JACK J. PARTAGAS, or any
of
them, with power of substitution, as proxies of the undersigned (the “Proxy”),
with power to appoint his substitute, and hereby authorizes him to represent
and
to vote, as specified below, all of the shares of common stock of the
undersigned held of record by the undersigned on March 6, 2006, at the
Annual
Meeting of Shareholders of Commercial Bankshares, Inc. (the “Company”) on April
20, 2006, and at all adjournments thereof (the “Annual Meeting”), on the matters
set forth below AND
TO VOTE IN HIS DISCRETION FOR THE TRANSACTION OF SUCH OTHER BUSINESS AS
MAY COME
BEFORE THE ANNUAL MEETING.
WHEN
PROPERLY EXECUTED AND RETURNED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED
BY THE UNDERSIGNED. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED
“FOR”
THE PROPOSALS SET FORTH ON THIS PROXY CARD. A VOTE TO ABSTAIN WILL NOT
BE
COUNTED TOWARDS THE REQUISITE AFFIRMATIVE VOTE TO APPROVE SUCH
PROPOSALS.
PLEASE
COMPLETE, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE, AND MAIL IT PROMPTLY
IN
THE ENCLOSED POSTAGE PAID ENVELOPE.
|
Address
Change/Comments (Mark
the corresponding box on the reverse side)
|
|
|
|
o
|
|
Please
Mark
|
|
Here
for
|
|
Address
Change
|
|
or Comments
|
|
SEE
REVERSE
SIDE
|
| 1. Election of Directors: |
I
PLAN TO ATTEND THE
|
||||
|
ANNUAL
MEETING o
|
|||||
|
NOMINEES:
|
|
|
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|
01
Joseph W. Armaly
|
02
Jack J. Partagas
|
FORALL
|
WITHHELD
|
The undersigned acknowledges | |
|
03
Cromwell A. Anderson
|
04
Robert Namoff
|
Nominees
listed
|
AUTHORITY | receipt of the accompanying | |
|
05
Sherman Simon
|
06
Michael W. Sontag
|
(except
as indicated
|
to
vote for all
|
Notice
of Annual Meeting of
|
|
| 07 Martin Yelen |
to
the contrary)
|
nominees
listed
|
Shareholders
to be held on
|
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|
|
|
o
|
o
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April
20, 2006.
|
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| Instructions: (To withhold authority to vote for any nominee, | Dated: _______________, 2006 | ||||
|
write
the name of the nominee below.)
|
|||||
| Signature | |||||
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2. Other
Business: In his discretion, the Proxy is authorized to vote
|
FOR
|
AGAINST
|
ABSTAIN
|
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|
on
such other business as may properly come before the Annual
|
o
|
o
|
o
|
||
|
Meeting
or any adjournment or postponement
thereof.
|
Signature
|
||||
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Name
(please print)
|
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Company/Title
|
|||||
Your
signature should appear exactly as your name appears in the space above.
For
joint accounts, both should sign. When signing in a fiduciary or representative
capacity, please give your full title as such. If a corporation or partnership,
sign in full corporate or partnership name by authorized officer or
partner.